Oil prices experienced a slight dip on Monday following the decision by the oil cartel OPEC+ to extend voluntary output cuts until the second quarter of the year. This move aims to bolster the short-term stability of crude markets amid ongoing uncertainties.
Global benchmark Brent crude saw a marginal decrease of 0.05%, trading at $83.52 per barrel on Monday, while U.S. West Texas Intermediate (WTI) futures also slipped by 0.19% to $79.82 per barrel.
OPEC+ announced on Sunday that the planned 2.2 million barrels per day of voluntary output cuts, initially set for the first quarter of 2024, will now be prolonged into the following quarter. Saudi Arabia, a key player in the group, stated that it would continue its voluntary reduction of 1 million barrels per day until the end of the second quarter, maintaining its crude production at around 9 million barrels per day until June.
Russia, another major contributor to OPEC+, committed to cutting its production and export supplies by a combined 471,000 barrels per day until the end of June, slightly less than its initial pledge of 500,000 barrels per day for the first quarter. Additionally, other significant producers like Iraq and the UAE will extend their voluntary production cuts until the end of the second quarter.
The decision by OPEC+ to prolong output cuts underscores the group’s unity and determination to support oil prices above $80 per barrel in the second quarter. Analysts suggest that the move may also reflect concerns about less optimistic demand prospects for the upcoming months compared to initial expectations.
Despite OPEC+ efforts to balance the market, oil prices have remained within a narrow range of $75 to $85 per barrel since the beginning of the year. This stability comes amid ongoing challenges, including persistent attacks on maritime infrastructure in the Red Sea and geopolitical tensions stemming from conflicts like Israel’s confrontation with Hamas.
